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 On Planning for Development: globalised market structure  
Notes on how market structure, competition policy, international trade and integrated international production managed by  transnational corporations restrict developing countries national policies autonomy

By  Róbinson Rojas Sandford- 2007

The international division of production managed by transnational corporations is not new. Neither is new the type of barriers to independent national economies created by the way in which transnational corporations dominate markets either from the supply side, or the demand side, or both. For example, on 1st May 1974 the UN General Assembly  adopted a declaration on the establishment of a New International Economic Order, with the following principle among many others: "Regulation and supervision of the activities of transnational corporations by taking measures in the interest of the national economies of the countries where such transnational corporations operate on the basis of the full sovereignty of those countries" ( See General Assembly Declaration and Programme of action on the establishment of a New International Economic Order ) . Of course, neither this principle, nor the whole declaration have become international law ever. What is new is the complexity of  global value chains in conditions of market openness (unregulated markets) which gives gigantic corporate capital limitless economic and political autonomy and restrict developing countries' ability to create autonomous development planning, whose mirror image is the widening global imbalances, destabilizing speculation and growing flow of value added from poor countries to rich countries.

In the last few years UNCTAD have been researching on the way in which developing countries openness to transnational capital restricts the autonomy of developing countries governments for  planning for development. Analysing interdependence, international collective action and policy space, UNCTAD stated that... "pressures for greater openness, particularly in an uncertain economic environment and an era of dynamic structural change, have made it increasingly difficult for countries to pursue their own national policies for development and integration into the global economy. The openness agenda overlooks the fact that the advanced industrial economies engaged in very active economic policies in pursuit of their development, and it ignores their history of building “hard States” to guide that process... Instead, by concentrating on market forces and “getting prices right” to maximize the gains from a given pattern of factor endowments, the openness agenda has perpetuated a lopsided view of the forces driving economic integration. It stresses the potential gains from participation in international markets while downplaying adjustment costs, and it stresses convergence tendencies while ignoring potential sources of cumulative divergence. As the previous sections have suggested, this approach has its limitations. Trade is just one among several interrelated factors shaping integration. Its impact is largely contingent on the presence of dynamic forces –-specialization, learning and innovation, scale economies and capital formation- – that do not respond in a simple or predictable way to the incentives generated from rapid opening up. Strengthening these forces requires a series of complementary institutional reforms and discretionary macroeconomic, industrial and social policy measures. This implies considerable diversity in the pattern of integration, even among countries at similar levels of economic development."

"Trade is just one number of interrelated factors shaping reforms and discretionary macroeconomic, industrial and social policy measures. This implies considerable diversity in the pattern of integration, even among countries at similar levels of economic development. Development strategies that successfully harness trade to a strong growth dynamic will necessarily lead to closer links with the wider international economy, especially with neighbouring economies. This will make the success or failure of those strategies increasingly dependent on trends and policies elsewhere...It is unlikely that the policy trade-offs will ever be satisfactorily resolved by privileging external goals, even as countries seek to maximize the benefits from closer participation in the international division of labour. Rather, stability will depend, in part, on the ability and willingness of individual countries to pursue policies that are compatible not only with their own national objectives, but also with the objectives and policies of other countries. It is therefore necessary to find common objectives among countries at varying levels of development around which a stable pattern of integration can be built."...

"Thus, contrary to the thrust of the openness model, the search for economic stability and balance is not between autarky and surrendering national sovereignty to the expansive logic of markets. Nor does the latter provide the institutional standard against which development success should be judged. Rather, in an interdependent world, the balance between economic welfare at the national level and integration at the international level will continue to hinge on an appropriate mix of market forces, policy space and collective actions."
...(see TADR 2004, Ch. III, pp. 95-97,)

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